For the first time since the breakup of the Soviet Union, arch rivals Turkey and Armenia seem ready to set aside their historical differences and establish good neighborly ties. While cautioning against too high expectations, Armenian Foreign Minister Vardan Oskanian recently described Ankara's overtures and Yerevan's reciprocal gestures as "small steps in the right direction." RFE/RL reports on the hopes and objections raised on both sides of the sealed Turkish-Armenian border.

Prague, 25 July 2003 (RFE/RL) -- Ankara is exploring ways to establish ties with arch rival Armenia following the victory of Turkey's Justice and Development Party (AKP) in last November's legislative polls.

Regional analysts generally believe Turkey's Islamic-rooted AKP government has displayed a much more pragmatic approach to international politics than its predecessors.

Although AKP candidates had included possible normalization of ties with Armenia in their election program, the first tangible signs that Turkey was ready to review its policy appeared after the European Union's Copenhagen summit last December.

The 15-member bloc then refused to set a date for the start of entry talks with Ankara but pledged to assess its commitment to accession criteria in late 2004 with a view to opening formal negotiations the following year.

Brussels is primarily concerned by Turkey's poor economic indicators and human rights record. Yet it has made no secret that establishing ties with Yerevan would boost Ankara's chances of joining.

Both the EU and the United States have been promoting regional economic projects, such as the Transport Corridor Europe Caucasus Asia (TRACECA) and are pressing for a rapprochement between Ankara and Yerevan.

Istanbul businessman Kaan Soyak is the co-chairman of the Turkish-Armenian Business Development Council (TABDC), a nongovernmental organization that was set up six years ago to help maintain business contacts between Ankara and Yerevan with the tacit approval of both capitals.

Soyak told RFE/RL that although talks on the resumption of ties have been going on for some years, never before have both governments seem so genuinely interested in pushing for a rapprochement.

"I believe this is the first time both governments are so sincere. Most importantly, they have identified one by one the major problems that exist between our two countries and have assigned them priorities. We have all reasons to believe they have never been so sincere, and we are very much optimistic about the upcoming meeting our foreign ministers will have next September," Soyak said.

When the Soviet Union broke up in 1991, Ankara refused to recognize newly independent Armenia because of its three-year-old conflict with Azerbaijan over the Nagorno-Karabakh enclave.

As a further sign of support toward Turkic Azerbaijan, which was then experiencing a series of military defeats on the Karabakh front, Turkey closed its eastern border in 1993, thus de facto decreeing an economic embargo against Armenia.

Officially, there is no trade between Turkey and Armenia, but goods circulate freely between the two countries through Georgia and Iran. Nevertheless, the decision to sever direct trade ties with Armenia has badly hit the Turkish economy, especially on eastern Anatolia's desolate plateau.

Nicolas Tavitian is the co-founder of the Brussels branch of TABDC. He says pressure exerted on Turkey's AKP cabinet by the EU and the U.S. cannot alone explain recent Turkish overtures toward Armenia.

"Turkey's Western partners have started talking about the reopening of the border much more actively than they had been doing for the past 10 years. Yet I believe that Turkey's own economic interests are playing a role here, and that it is precisely because [the Turks have] much to win from the border reopening that they are perhaps seriously considering that possibility now," Tavitian said.

The rapprochement started taking shape on the sidelines of a NATO ministerial meeting in Madrid on 3-4 June. Emerging from talks with his Armenian counterpart, Turkish Foreign Minister Abdullah Gul said Ankara might consider reopening its eastern border soon.

Another sign came on 19 June, when NATO held its first military exercises in Armenia. For the first time since 1991, Turkey's "Istiklal Marsi" national anthem sounded out in that part of the Southern Caucasus to welcome a group of Turkish soldiers taking part in the war games.

Turkish media immediately speculated that Prime Minister Recep Tayyip Erdogan would use a planned visit to Kars, an eastern Anatolian city not far from Armenia, to announce the reopening of the border. But the Turkish leader instead said Ankara would not lift its embargo until Armenia stops campaigning for the international recognition of the 1915 genocide.

The massacre of hundreds of thousands of ethnic Armenians by Turkish soldiers in the final years of the Ottoman Empire has been a major bone of contention between Ankara and Yerevan.

Armenia claims 1.5 million people died as the result of a carefully organized genocidal campaign. Turkey denies both the genocide charge and the death toll, saying tens of thousands of Armenians were killed in what it says was mere "domestic unrest." It also blames Armenians for the subsequent killing of thousands of Turks.

Many in Yerevan -- especially among the nationalist Armenian Revolutionary Federation-Dashnaktsutiun (HHD) -- make recognition of the genocide by Turkish leaders a precondition to improving relations.

For Armenia, however -- an impoverished, landlocked country of 3.2 million essentially supported by distant Russia -- normalizing relations with its western neighbor is a necessity.

Speaking on 18 July at RFE/RL's headquarters in Prague, Armenian Social Security Minister Aghvan Vartanian said both countries are bound to resume ties, if only out of economic and geographical considerations.

"That relations between our two countries should be normalized is obvious. We must normalize our relations with Turkey, Azerbaijan, and all our neighbors. This is a necessity because no country in the region can develop itself isolated from [its neighbors]. We are convinced that there is no possible alternative to regional cooperation," Vartanian said.

The TABDC believes that, with the reopening of the sole Gyumri (formerly Leninakan) border gate, annual trade volume between Turkey and Armenia could double and reach $300 million within a year. It also says the opening of the Armenian-Azerbaijani border would boost Turkey's trade with Central Asia by cutting transportation costs by 35 percent.

As Tavitian points out, Armenia is the most natural export route for Turkish goods meant for the former Soviet Union: "The reason why Armenia is so important for Turkey is that all [main] existing [export] infrastructures are going through that country. All that existed under the Soviet Union -- be it roads or railways -- was going through Armenia. Aside from Iran, the natural corridor to reach [the Azerbaijani capital] Baku from Turkey crosses the Ararat plain, the [Azerbaijani exclave of] Nahcivan, the Zangezur mountains, and then Azerbaijan. To the north, there is a railroad link going to Gyumri [in Armenia] and Georgia. So the main two arteries to reach the former Soviet world go through Armenia. For Turkey, this is the problem."

In an attempt to further isolate Armenia, politicians in Turkey and Azerbaijan have drawn up plans to build a new, 780 kilometer railway link from Kars to Baku through Georgia's predominantly Armenian region of Akhalkalaki.

But many in Turkey question the economic rationale behind this project. Soyak says renovating the Soviet-era Kars-Gyumri-Tbilisi line would be much cheaper and economically much more viable.

"This is just a political project. We have no objection to it, but should we ask the Turkish state railways whether they think this project is necessary when the border between Turkey and Armenia reopens, obviously the answer would be 'no' because the annual capacity of the existing line is 10 million tons a year. This is huge. We must first use this line and, only if necessary, look at the possibility of building a second railway," Soyak said.

The closure of two-thirds of Armenia's borders has left it with Georgia as its major export outlet. But because of the dispute between Tbilisi and the breakaway republic of Abkhazia, the rail link between Armenia and Russia to the north remains closed.

A 2001 report released by the U.S. Agency for International Development notes that corruption, inefficiencies, and weak management compromise the shipment of goods through Georgia and "create a serious setback for Armenia's competitiveness."

Tavitian says resumption of direct trade with Turkey would bring Armenia immediate and substantial economic benefits: "The World Bank says that [in that case] Armenia's exports would double in the short term and its gross domestic product [GDP] would increase by an estimated 30 to 40 percent. Armenia's GDP currently stands at $2 billion, and the World Bank believes that if both borders -- the Turkish-Armenian border [to the east] and the Azerbaijani-Armenian border [to the west] -- were reopened, it would get at least an additional $500 million or so. This is considerable."

Yet, Armenia's pro-presidential HHD party has cautioned against the reopening of the border, saying Turkish goods would saturate the domestic market and strike a blow to local manufacturers and businessmen.

HHD, which holds a number of seats in the coalition cabinet -- including the Social Security Ministry -- also opposes the idea of establishing direct ties between the Turkish and Armenian legislatures until Ankara recognizes the 1915 genocide. The idea was floated last month by Parliament Speaker Artur Baghdasarian.

In Turkey, too, many resist the idea of resuming ties with Yerevan, saying armed forces of the self-proclaimed Nagorno-Karabakh republic should first liberate the Azerbaijani lands they have been occupying since 1993.

The possible Turkish-Armenian rapprochement has also raised concerns in Azerbaijan, which fears it could weaken its position in the search for a political settlement of the Karabakh dispute.

Regional experts believe resumption of trade or establishment of diplomatic relations between Turkey and Armenia would -- at least temporarily -- affect ties between Ankara and Baku.

"The main reason why attempts at reopening the border have failed so far is Azerbaijan. Should Turkey lift its blockade of Armenia, Azerbaijan would lose its main leverage on Armenia. Consequently, Azerbaijan is pressing Turkey -- as it has done in the past -- to maintain its blockade because the blockade can be effective only if Armenia is isolated from both sides," Tavitian said.

Ankara last December made it clear economic considerations would prevail over its strategic ties with Baku when it decides whether to resume ties with Armenia.

"We will take Azerbaijan's concerns into account when we decide to establish ties with Armenia," then Turkish Foreign Minister Yasar Yakis said after the EU summit. "But if our economic interests demand that we establish relations with Armenia, we must do so."

Analysts warn, however, that it would be wrong to conclude that the ongoing rapprochement between Turkey and Armenia heralds a shift in Ankara's policy toward Baku.

"In that kind of game, it is in no one's interest to change partners in the middle of the dance. One has to continue dancing with two partners," Tavitian said, adding, "The same way Azerbaijan is dancing with Russians and Turks alike, Turkey must not let Azerbaijan down for Armenia."